Penguin Solutions prices $750M convertible notes, refinances $295.5M existing debt at 0% coupon

Item 2.03

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The disclosure set forth under the heading Indenture and Convertible Senior Notes in Item 1.01 of this Current Report on Form 8-K is incorporated by ref

Penguin Solutions, Inc., the AI Factory Platform Company (“Penguin,” “we” or the “Company”) (Nasdaq: PENG), today announced the pricing of $650.0 million in aggregate principal amount of convertible senior notes due 2031 (the “Notes”) to be offered and sold to qualified institutional buyers as defined in Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). ... The Notes will be senior, unsecured obligations of the Company. The notes will not bear regular interest, and the principal amount of the notes will not accrete. The Notes will mature on August 1, 2031, unless earlier converted, redeemed or repurchased. ... The initial conversion rate of the Notes is 8.5690 shares of common stock per $1,000 principal amount of Notes (which is equivalent to an initial conversion price of approximately $116.70 per share and represents a conversion premium of approximately 50% above the closing price of the Company’s common stock on July 14, 2026, which was $77.80 per share).

Penguin estimates that the net proceeds from the offering will be approximately $636.9 million (or approximately $735.1 million if the initial purchasers fully exercise their option to purchase additional Notes), after deducting the initial purchasers’ discounts and commissions and estimated offering expenses.

Penguin expects to use approximately $42.6 million of the net proceeds to fund the cost of entering into the capped call transactions described below; approximately $298.1 million of the net proceeds to pay the cash portion of the consideration for the Existing Notes (as defined below) being refinanced through concurrent exchange transactions described below; and $100.0 million of the net proceeds to repay amounts outstanding under the credit agreement, dated as of June 24, 2025, among Penguin Solutions (Cayman), Inc. and Penguin Solutions Corporation (formerly known as SMART Modular Technologies, Inc.), each a wholly owned subsidiary of Penguin, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, collateral agent and issuing bank and the other parties thereto (the “Credit Agreement”). Penguin intends to use the remainder of the net proceeds for general corporate purposes.

Concurrently with the offering, in separate, privately negotiated transactions with a limited number of holders of Penguin Solutions (Cayman), Inc.’s 2.00% convertible senior notes due 2029 (the “2029 Notes”) and 2.00% convertible senior notes due 2030 (the “2030 Notes” and together with the 2029 Notes, the “Existing Notes”), Penguin Solutions (Cayman), Inc., as issuer of the Existing Notes, and the Company, as guarantor of the Existing Notes, expect to exchange (i) approximately $135.5 million principal amount of the 2029 Notes for aggregate consideration consisting of approximately $136.7 million in cash, which includes accrued interest on such 2029 Notes, and approximately 4.7 million shares of the Company’s common stock, and (ii) $160.0 million principal amount of the 2030 Notes for aggregate consideration consisting of approximately $161.4 million in cash, which includes accrued interest on such 2030 Notes, and approximately 4.0 million shares of the Company’s common stock.

The Notes will be redeemable, in whole or in part, for cash at Penguin’s option at any time, and from time to time, on or after August 6, 2029, and on or before the 31st scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of common stock of the Company exceeds 130% of the conversion price for a specified period of time and certain other conditions are satisfied. The redemption price will be equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid special and additional interest, if any, to, but excluding, the redemption date.

If certain corporate events that constitute a “fundamental change” (as defined in the indenture for the Notes) occur, then, subject to a limited exception, noteholders may require Penguin to repurchase their Notes for cash. The repurchase price will be equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid special and additional interest, if any, to, but excluding, the applicable repurchase date.

Penguin Solutions, Inc. (“Penguin,” “we” or the “Company”) (Nasdaq: PENG) today announced it intends to offer $650.0 million in aggregate principal amount of convertible senior notes due 2031 (the “Notes”) to qualified institutional buyers as defined in Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), subject to market and other conditions. Concurrently with the offering, the Company expects to enter into privately negotiated exchanges of a portion of certain existing convertible senior notes due 2029 and 2030. The Company also expects to grant to the initial purchasers of the Notes an option to purchase, for settlement within a period of 13 days from, and including, the date the Notes are first issued, up to an additional $100.0 million aggregate principal amount of Notes.

Concurrently with the offering, in separate, privately negotiated transactions, Penguin Solutions (Cayman), Inc., as issuer of the Existing Notes, and the Company, as guarantor of the Existing Notes, expect to enter into exchange agreements with a limited number of holders of Penguin Solutions (Cayman), Inc.’s (i) 2.00% convertible senior notes due 2029 (the “2029 Notes”) and (ii) 2.00% convertible senior notes due 2030 (the “2030 Notes,” and together with the 2029 Notes, the “Existing Notes”) to exchange a portion of the outstanding Existing Notes for a combination of cash and shares of Penguin’s common stock.

Penguin expects to use the net proceeds from the offering to fund the cost of entering into the capped call transactions described below, pay the cash portion of the consideration for the Existing Notes (as defined below) being refinanced through concurrent exchange transactions described below, repay $100.0 million outstanding under the credit agreement, dated as of June 24, 2025, among Penguin Solutions (Cayman), Inc. and Penguin Solutions Corporation (formerly known as SMART Modular Technologies, Inc.), each a wholly owned subsidiary of Penguin, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, collateral agent and issuing bank and the other parties thereto (the “Credit Agreement”) and for general corporate purposes.

In connection with the pricing of the Notes, Penguin expects to enter into privately negotiated capped call transactions with one or more of the initial purchasers and/or their respective affiliates and/or other financial institutions (the “Option Counterparties”). The capped call transactions are expected to cover, subject to anti-dilution adjustments substantially similar to those applicable to the Notes, the number of shares of the Company’s common stock that will initially underlie the Notes ... The capped call transactions are expected generally to reduce the potential dilution to holders of the Company’s common stock upon any conversion of the Notes and/or offset any cash payments Penguin is required to make in excess of the principal amount of converted Notes, as the case may be, upon conversion of the Notes.

The Notes will be redeemable, in whole or in part, for cash at Penguin’s option at any time, and from time to time, on or after August 6, 2029, and on or before the 31st scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of common stock of the Company exceeds 130% of the conversion price for a specified period of time and certain other conditions are satisfied. The redemption price will be equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

If certain corporate events that constitute a “fundamental change” occur, then, subject to a limited exception, noteholders may require Penguin to repurchase their Notes for cash.

On July 13, 2026, the Company issued a press release announcing the launch of the offering and sale of the Notes.

On July 14, 2026, the Company issued a press release announcing the pricing of the Notes.

the expected use of net proceeds and the consummation of the Exchange Transactions

The Notes were issued to the Initial Purchasers in reliance upon Section 4(a) (2) of the Securities Act of 1933, as amended (the “Securities Act”), in transactions not involving any public offering. The Notes were resold by the Initial Purchasers to persons whom the Initial Purchasers reasonably believe are “qualified institutional buyers,” as defined in, and in accordance with, Rule 144A under the Securities Act.

Initially, a maximum of 9,640,050 shares of Common Stock may be issued upon conversion of the Notes, based on the initial maximum conversion rate of 12.8534 shares of Common Stock per $1,000 principal amount of Notes, which is subject to customary anti-dilution adjustment provisions.

The issuance and sale of Common Stock pursuant to the Exchange Transactions were or will be made in transactions exempt from registration pursuant to Section 3(a) (9) and/or Section 4(a) (2) under the Securities Act.

On July 17, 2026, Penguin Solutions, Inc. (the “Company”) issued $750.0 million aggregate principal amount of the Company’s 0.00% Convertible Senior Notes due 2031 (the “Notes”) pursuant to an indenture, dated July 17, 2026 (the “Indenture”), between the Company and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).

The Company estimates that the net proceeds from the offering of the Notes will be approximately $735.1 million, after deducting the Initial Purchasers’ discounts and commissions and estimated offering expenses payable by the Company. The Company is using (1) approximately $136.7 million of the net proceeds to repurchase $135.5 million aggregate principal amount of Penguin Solutions (Cayman), Inc.’s existing 2.00% convertible senior notes due 2029 (the “2029 Notes”), (2) approximately $161.4 million of the net proceeds to repurchase $160.0 million aggregate principal amount of Penguin Solutions (Cayman), Inc.’s existing 2.00% convertible senior notes due 2030 (the “2030 Notes,” and together with the 2029 Notes, the “Existing Notes”), (3) approximately $49.1 million of the net proceeds to pay the cost of the Capped Call Transactions (as defined below) and (4) net proceeds to repay the $100.0 million principal amount outstanding under the credit agreement, dated as of June 24, 2025